H.R. 1599 — Dismantling Investments in Violation of Ethical Standards through Trusts Act

This section establishes a new subchapter IV in Chapter 13 of title 5, United States Code, prohibiting senior Federal employees (i.e., those in Senior Executive Service positions), their spouses, or dependent children from holding, purchasing, or selling covered financial instruments during the employee's term of service. Covered financial instruments include securities (as defined in 15 U.S.C. 78c(a)), security futures, commodities (as defined in 7 U.S.C. 1a), or comparable synthetic interests (e.g., derivatives such as options or warrants), excluding diversified mutual funds, diversified exchange-traded funds, U.S. Treasury bills, notes, or bonds, and compensation from a spouse's or dependent child's primary occupation. The prohibition does not apply to (1) sales completed within 180 days of enactment (for current employees) or service commencement (for new employees); (2) instruments held in qualified blind trusts; or (3) instruments exempted under 18 U.S.C. 208 per 5 C.F.R. §2640.202 (or successor). It treats the requirements as a federal conflict-of-interest statute for purposes of the certificate of divestiture program under IRC §1043. Violations require disgorgement of profits to the Treasury, disallow income tax deductions for losses, and authorize the supervising ethics office to assess civil fines equal to the greater of $1,000 or 10% of the instrument's greatest dollar value during the violation period (after notice and opportunity for hearing). Senior Federal employees must submit annual compliance certifications to the supervising ethics office, which publishes them online; the office may issue implementing rules, good-faith divestiture extensions, and guidance.